Whitehouse, Wyden, Grassley, Rubio Urge Strong Implementation of Anti-Money Laundering Reform

05.05.21

Washington, DC - Today, Senators Sheldon Whitehouse (D-RI), Ron Wyden (D-OR), Chuck Grassley (R-IA), and Marco Rubio (R-FL) sent a bipartisan comment to the Financial Crimes Enforcement Network (FinCEN) encouraging the efficient, effective implementation of a beneficial ownership reporting system, as required by the Corporate Transparency Act (CTA). The senators have long championed greater transparency in the United States's incorporation laws to crack down on shell companies used to facilitate money laundering, kleptocracy, and international corruption. Throughout the last decade, the senators have held numerous hearings and led various pieces of legislation on the issue, culminating in the CTA. Senator Whitehouse describes the problem as a 'clash of civilizations' between rule-of-law nations and those governed by autocracy, kleptocracy and criminality, where rule-of-law nations aid and abet their adversaries by providing sanctuary for their stolen wealth. '[T]he CTA is the product of a sensitive and painstaking legislative process, and its passage represents perhaps the most important anti-money laundering reform of the past decade,' the senators write in their letter. 'Despite the legislative success, this achievement can only be realized if the system works in practice. As such, we encourage FinCEN to implement a straightforward, efficient, and effective system and to do so promptly.'

Congress passed the CTA to combat kleptocracy by clamping down on criminals and foreign enemies hiding assets from law enforcement and tax authorities. The legislation requires FinCEN to obtain information on the true owners of corporations and LLCs formed within the United States, and to set up a database to help law enforcement access that information when necessary. Its passage marked the culmination of a years-long effort to combat money laundering, international corruption, and kleptocracy.

FinCEN must properly implement the system to reflect Congress's intent, and avoid creating loopholes and bureaucratic hurdles that could delay law enforcement's access to beneficial ownership information, the senators write. Failure to do so would further enable bad actors from around the globe to abuse America's legal and financial institutions.

Full text of the letter is below. A PDF copy is available here.

May 5, 2021

Policy Division
Financial Crimes Enforcement Network
P.O. Box 39
Vienna, VA 22183

Re: FINCEN-2021-0005 and RIN 1506-AB49

To Whom It May Concern,

We write in response to the Financial Crimes Enforcement Network's (FinCEN) advance notice of proposed rulemaking regarding to the implementation of the Corporate Transparency Act (CTA), enacted into law as part of the National Defense Authorization Act for Fiscal Year 2021. As a bipartisan group of senators, we encourage FinCEN to implement a strong, efficient, and effective system that respects congressional intent.

The passage of the CTA marked the culmination of a years-long effort in Congress to combat money laundering, international corruption, and kleptocracy by requiring certain companies to disclose their beneficial owners to law enforcement, national security officials, and financial institutions with customer due diligence obligations. During that time, Congress held numerous hearings across a host of committees,[1] sought input from key stakeholders, worked with officials from both the Obama and Trump administrations, and considered multiple pieces of related legislation and models from other nations.[2]

In crafting the CTA, Congress negotiated many complex policy issues, including what information would be reported, how that information would be collected, and who would have access to it. We and other drafters of this law sought to strike the proper balance between collecting accurate and useful information and not overburdening businesses with compliance obligations. In the end, the CTA also received strong support from a vast and diverse stakeholder coalition, including law enforcement, national security experts, the business community, the real estate community, the financial sector, and non-governmental organizations.[3]

In light of the broad support for the CTA, we urge FinCEN to take all steps to ensure that the beneficial collection system reflects Congress's intent that the system produce high-quality data and that authorized users have timely access to that data. To achieve this, FinCEN should be mindful not to leave loopholes that could dilute the quality of the information collected or allow bad actors to evade reporting. Additionally, the information is only useful if authorized users are able to efficiently access the data. As such, FinCEN should ensure that authorized users, including law enforcement and national security officials, and financial institutions with customer consent, have early, timely, and full access to beneficial ownership information. The access procedures should build on existing protocols and those provided for in the legislation and should avoid creating redundant hurdles that would unnecessarily delay access.

In short, the CTA is the product of a sensitive and painstaking legislative process, and its passage represents perhaps the most important anti-money laundering reform of the past decade. Despite the legislative success, this achievement can only be realized if the system works in practice. As such, we encourage FinCEN to implement a straightforward, efficient, and effective system and to do so promptly.

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